As an apartment dweller, you’re aware that there’ll likely come a time where you have to figure out the next step after your lease is up. So, what are your options?
When your lease is up, there are three main options of what you can do:
- You can choose to renew your lease for another term
- You can agree with your landlord to switch to a month-to-month lease
- You can move out of the unit (remember to give proper notice) and find a new home
Table of Contents
What is a lease renewal?
A lease renewal is a new lease agreement. When your lease is up, you will have the option to renew your lease, which means that both you and your landlord/property manager can agree to continue with your arrangement. The landlord will then draw up a new lease agreement that is not too different from the original, and both you and the landlord (and any parties involved) will need to sign the new agreement.
What is the process of a lease renewal?
1. Make note of the lease renewal date
You’ll want to take note of when your lease is up. This way, you can start planning how and when you can talk to your landlord about the way forward.
2. Read your lease carefully
By going over your lease carefully, you’ll be able to find the termination date as well as other essential details, such as when you’re required to notify your landlord/property manager of your decision to renew your lease or move out.
3. Talk to your landlord
A month or two before your lease is up, talk to your landlord/property manager about your options. Some of the things you’ll want to inquire about include:
- Whether there’ll be a rent increase
Many apartment communities raise their market rent anywhere between two and five percent yearly (that’s if you’re going by a standard 12-month lease) with an average rise of around 3.18% per year. As a result, you can expect your rent to rise slightly when the time comes to renew your lease. However, if your landlord offered you a rental concession on your previous lease, your rent may be going up more than anticipated with a lease renewal.
- Whether to remove or add a roommate
You may want to add a roommate to help out with rent, or your current roommate may be moving out and therefore needs to be removed from the lease.
- Whether your unit requires upgrades
You may need an incentive like upgrades to your unit to renew your lease.
4. Make a final decision
Once you have all the relevant details of what is to be included in your new lease, you can make an informed decision.
5. Inform your landlord/property manager of your decision
Once you make a final decision, submit an email or letter (ask your leasing office which form of notice is preferred) to your landlord/property management to let them know.
6. Read over the new lease agreement
You’ll need to sign the new lease agreement, but make sure you go over it carefully before doing that. It should reflect any change in terms as well as designate the period of the new agreement. If something is not included in the lease, it’s not legally binding, so it’s vital to ensure everything is included before signing.
7. Sign the new lease
Both you and an apartment community representative will need to sign the new lease.
Other lease renewal considerations
There are pros and cons that your landlord/property manager will consider when going over your lease renewal request. Keep this in mind when negotiating your new lease terms.
Pros to renewing a lease
- It’s cheaper to keep a tenant
It’s cheaper for landlords to keep a tenant in their rental unit than to find a new one. If a tenant moves out, the landlord/property manager has to pay their security deposit back, fix the unit, list the property, show the property, and screen potential tenants. You can use this to your advantage when negotiating lease details.
- Prevents vacancy
Renewing a lease will prevent vacancy. If the property manager has to show the property to prospective tenants for a month before filling it, for example, that’s a month’s worth of rent that they lose out on.
- Reduces the risk of bad tenants
A landlord may be hesitant to rent out to a new tenant because there’s always the chance that they will not abide by the rules or pay rent on time. This is especially true if you’ve been a reliable tenant during your stay.
Cons to renewing a lease
- An increase in rent
Unfortunately, there is likely to be an increase in rent if you opt to stay in your apartment. Make sure you factor this in when renewing your lease.
- The property manager may want to renovate the property
Your landlord/property manager may be considering a renovation, especially if the apartment is older and needs significant upgrades.
What is a month-to-month lease agreement?
If you’re hesitant to commit to a long-term lease agreement (whether it’s because you need some time to decide if you want to renew or need a bit more time to look for your next home), a month-to-month lease agreement may be ideal for you.
A month-to-month lease is a contract between the tenant and landlord that establishes tenancy with no distinguished end date. Instead, either the tenant or landlord may opt to terminate the agreement as long as proper notice of non-renewal is provided. Most local or state laws require either 30, 60, or 90 days’ notice, but the lease agreement should specify.
Reasons to opt for a month-to-month lease
You may want to consider going for a month-to-month lease once your lease is up for the following reasons:
- You might move soon
It’s not uncommon for landlords to offer tenants the option to switch to a month-to-month contract or renew their lease for an entire year. If significant life changes are coming your way – say you’re getting a job in a new city, planning to buy a home, or getting married – the month-to-month option gives you the flexibility that you need for those options. If you end up not moving, a month-to-month lease can eventually be converted to a long-term lease.
Even if your landlord doesn’t readily offer you a month-to-month option, it won’t hurt to try convincing them to consider the option. If you’re a reliable tenant and haven’t caused any damage to the property, there’s a chance the landlord will be open to keeping you around without a specific end date.
- There’s no penalty for breaking your lease
When you have a fixed-term lease in place, and you need to move out before the provided end date, there can be a hefty cost to break that lease early. You may find yourself having to pay a couple of additional months of rent after you move out while your landlord preps and shows your unit, and you might even have to pay rent for the duration of your lease if the landlord fails to find a new tenant. If you might need to move soon, or you’re worried about the loss of income in the future, consider going for a month-to-month lease that will allow you to end the rental agreement with minimal fuss.
- You have roommates
Roommates can be challenging to work with when it comes to planning out the future. Suppose a roommate plans to move out before the long-term lease is up, rather than risking illegally subletting or releasing the soon-to-vacate roommate and amending your lease to bring on a pre-approved roommate. In that case, you can choose to start a new month-to-month lease with the replacement.
- Your next home is yet to be completed
You may be looking to move to a new apartment building that’s yet to be completed, or you may have commissioned your first home to be newly built – either way, you should anticipate delays by having an allowance in your current lease. A month-to-month lease is a great way to create leeway.
Reasons why a month-to-month lease may be unsuitable
Before negotiation a new month-to-month contract, consider the following downsides:
- You’ll likely pay more
Although a month-to-month lease allows timeline flexibility, it typically comes at an increased financial cost. In some major metropolitan areas with competitive rental markets, the difference between a fixed-term lease and a month-to-month contract for the same unit can be a few hundred dollars. This is because the need to offset the higher risk of a vacancy in the future motivates landlords to charge higher rent.
- Landlords might not agree
While many landlords are hesitant to month-to-month leases to avoid the risk of an increase in vacancy, some are unable to make such a deal. Depending on the type of loan the landlord took out on the rental property, a lender can restrict the month-to-month lease entirely.
- Your landlord can terminate the lease as well
Being able to move with a simple 30-day notice may be what you’re looking for, but remember that your landlord has that same liberty. This short-term contract allows your landlord to give you notice that you need to move out for any reason.
- You’ll miss out on concessions
Rental buildings in major urban centers often offer concessions like waived amenities fees or a free month of rent to remain competitive. However, if you’re considering a month-to-month lease, go over the fine print of these concessions carefully – they often require a long-term lease.
Moving out of your apartment
If you’ve opted out of both a month-to-month contract and a lease renewal, then the last option is to move out of your rental unit and find a new home. Whether month-to-month leasing is too expensive, the rent hike is too high for you to renew, or you’re simply looking to move to a new place, here are the basic steps to follow:
1. Give your landlord a written notice
To determine how much notice you have to give before moving out, check your lease. Apartment communities can require notice of 30 days, 60 days, or 90 days, so make sure you confirm this well in advance. If you fail to give proper notice, you risk being held responsible for several months’ rent or losing your security deposit. In most cases, you’ll need to send in a written notice.
2. Plan your move
Start planning your move once you figure out when your lease is up and when you have to move into your new home. Whether you’re using the services of a moving company or relying on the help of friends and family, try to plan out the details of your move at least a month in advance.
3. Call your utility providers
A few weeks before your move, call your utility provider and schedule your turn-off/turn-on dates. Make arrangements to have the utilities turned off at your current rental unit the day after you move out (so that you can avoid the water and electricity being shut off while you’re still moving out). You want the utilities to be turned on at your new unit the day before you move in.
4. Clean and fix everything
To avoid losing your security deposit, make sure you deep clean your current apartment and fix any damages that you may have caused. Most landlords will perform a thorough inspection to check for stains or damages, so don’t neglect any nooks or crannies.
5. Get your security deposit back
As long as your apartment is in good condition, you should have no issues getting your security deposit back.
6. Change your address
Changing your address is an important detail of moving that you shouldn’t forget. Start with the USPS and then work your way to other service providers.
As you can see, there are three logical options of what to do once your lease is up. You can choose to renew your lease, switch to a month-to-month lease, or move out and find a new home. Just make sure you go over your lease contract carefully to know the best way to move forward.